March 17, 2009

 

CBOT Soy Review on Monday: Gains sustained as crude oil turns positive

 

 

Chicago Board of Trade soybean futures posted strong gains Monday, bolstered by gains in crude oil and equities and weakness in value of the U.S. dollar index.

 

May soybean contracts finished up 34 1/2 cents a bushel to close at US$9.11. The contract traded in a 36-cent range, topping at US$9.18. July soybeans added 32 1/4 cents to close at US$9.07 1/2. It spread a 33-cent range, topping at US$9.14. November soybeans gained 26 3/4 cents to US$8.50 1/2.

 

Midday estimates pegged speculative fund buying at 5,000CBOT soybean contracts.

 

"Funds were short and they're working quickly to cover most of those," said Dan Cekander, director research at Newedge.

 

Soybeans led the agricultural complex higher Monday, finding additional support in later gains by crude oil as the Dow Jones Industrial Average rose more than 100 points and the value of the U.S. dollar index weakened, CBOT floor traders said.

 

There is some soybean movement in the U.S. and South America and month-end seasonalities and stabilizing outside markets are supportive of the soybean markets, a CBOT broker said.

 

Last week, the trade encountered significant resistance at the 20-day moving average of US$8.80, but now the bulls are working to press the US$9.25 100-day moving average, he added.

 

"If we've overshot on the downside and the rest of the world becomes more stable in terms of demand, we'll work higher from here," he said.

 

U.S. soybeans inspected for export in the week ended March 12 totaled 22.416 million bushels, down 27.4% from the previous week's 30.855 million, according to data released Monday by the U.S. Department of Agriculture.

 

Analysts expected weekly inspections to range from 22 million to 29 million bushels.

 

The primary destination for the soybeans was China, which accounted for 11.238 million bushels. Accumulated soybean export inspections for the 2008-09 marketing year total 876.4 million bushels, up 11.44% from the 786.446 million reported at the same time last year.

 

Regarding global trade issues, CBOT floor traders said they expect more clarity on Argentine export potential following a Tuesday meeting scheduled between Argentina's government and farmers.

 

Farmers will meet with government officials again on Tuesday for the fourth round of weekly talks, which have produced a partial agreement to avoid new strikes. However, the situation remains tense over an export-tax issue.

 

A return of drier weather during the past week or two has drawn soil moisture down again in much of western and far northern Argentina, according to Cropcast Agricultural Weather.

 

Dryness is drawing down yield potential for double-crop soybeans in at least a quarter of the soybean belt, but the Cropcast forecast supports ideas of rain around next Tuesday and this "could help to curb some additional losses for double-crop areas and prevent an expansion of late-season dryness concerns," the private weather firm said.

 

"As of last week, double-crop soybeans were still rated average to good, based on official reports," Cropcast said. "However, first-crop soybean conditions were downgraded since the end of February to average to poor condition."

 

 

SOY PRODUCTS

 

The CBOT soy complex finished higher Monday, mirroring gains in soybeans, crude oil and equities. U.S. dollar weakness was also supportive as was a better-than-expected monthly crush estimate, traders said.

 

May soymeal gained US$11.70 to US$288.40 per short tonne and May soyoil added 69 points to 30.86 cents per pound. Speculative funds bought an estimated 1,000 soymeal and soyoil lots, respectively, according to mid-day estimates.

 

May soyoil share ended at 34.85% and the March crush ended at 63 cents.

 

The National Oilseed Processors Association estimated February soybean crush at 128.668 million bushels, down 10.432 million from last month. Analysts, however, expected a deeper cut in the crush, to 126.2 million bushels, given sluggish domestic meal demand.

 

"NOPA crush was above expectations and so it probably further reduces most analysts' estimates of March 1 Stocks in All Positions," said Anne Frick, oilseeds analyst at Prudential Bache.

 

"[Soymeal] prices held above March 2 lows last week, indicating that we probably saw the 'February break' low and may have begun a seasonal rally into the spring which is probably generating some short-covering as a result," Frick said.